Cryptocurrency Tax Software: What the IRS Requires
Crypto tax software imports trades, works out gains, and fills IRS forms for federal returns. The IRS treats digital assets as property, not currency.
Vahe HakobyanEditor-in-chief
Updated Oct 5, 20263 min readFact-checked
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Software sits between your exchange records and your return, and it cannot invent data your exchange or wallet never saved. A crypto profit calculator works out the gain or loss on one trade, while tax software totals a whole year of activity.
Do you need crypto tax software?
You need a way to report crypto to the IRS if you had taxable crypto activity. The IRS treats digital assets as property under Notice 2014-21, issued in 2014, so selling, swapping, or spending can be taxable. Software helps most when you used several platforms or made many trades.
Which crypto events are taxable?
The IRS taxes some events and not others. Selling, swapping, and spending are disposals, so a gain or loss is taxable. Buying and holding, or moving coins between your own wallets, usually is not.
How does software calculate gains?
The software imports trades from your exchanges and wallets, matches each sale or swap to the coin you acquired, and works out cost basis and gain or loss. Missing data gets flagged rather than filled in.
How do you report income and gains?
The form depends on the event. Sales and swaps go on capital gains forms, and your return asks a digital asset question you answer Yes or No. Staking, mining, airdrops, and interest are usually ordinary income when received, even when you did not sell.
Frequently asked questions
Many programs read DeFi and NFT activity from wallet addresses or exchange records, but complex events such as liquidity pools often need manual review. Check that the software covers the chains and marketplaces you used.
You can usually download a CSV file of your transactions or connect through the exchange API. If cost basis is missing, software cannot create it, so you may have to rebuild it from wallet history and your own records.
Some products prepare state returns along with the federal return, and the states they support differ. Check the state list for your software before you rely on it.
Keep exchange statements, wallet records, and transaction histories long after you file. The IRS can question a return for a limited period that varies with the situation.
